Just fired off an email to an Investor inquiring whether USDA had a problem with him having bought the property 3 1/2 weeks ago and reselling it for profit.
Of course, answer is **NO**** !! USDA Zero Down (Rural Housing) loans do not have a “Anti Flipping” rule like FHA had.
Even FHA has waived/modified it’s Anti-Flipping policy so it’s less burdensome for investors and homebuyers. But with USDA, there are no restrictions whatsoever.

17 Responses to “Some USDA Zero Down Loan questions”
  1. Jose Dichoso says:

    With FHA my Remax guy is telling me I will have to jump through extra hoops if I resell the house for more than 120% of what I bought it for. Are you telling me with USDA this is not the case??? Why isn’t my realtor telling me this darn it?

    • Administrator says:

      Jose
      Correct. FHA anti-flipping rules have been modified but not completely eliminated. If the seller of a home is reselling it for more than 20% of the acquisition price, then a 2nd appraisal + home inspection ordered by the Lender is typically required.
      With USDA Zero down loans, there is no ‘flip’ restriction whatsoever. Hope this answers your question.

  2. Jon Z. says:

    Ok, what the heck is a flip?? Sounds like something yu do on the freeway not in real estate!

    • Administrator says:

      A flip in real estate describes an Owner of a property reselling it (usually for profit, lol) almost immediately after acquiring it.
      FHA has certain restrictions regarding flip property deals, whereas USDA Zero Down does not.

  3. Yoshi Akita says:

    kinda makes me curious why investors aren’t using this program more…

    • Administrator says:

      Yoshi
      funny you mention it! Investors love this program, because they’re not forced to jump through all the hoops FHA makes them jump through when homes are “flipped” for profit.
      I actually know certain investors who target USDA eligible areas for their investments (buying/selling) so that the end buyer can get easy zero down financing :)

  4. Fatima says:

    can any house fit this rule then for USDA??

    • Administrator says:

      Fatima
      There are restrictions for USDA Zero Down financing based on
      (i) the type of property i.e. Condos, Townhomes, Single family homes, manufactured homes etc. Plz refer to the Homebuyer guides on this blog for more details.
      (ii) there are geographic restrictions – ie. there are eligible & ineligible areas. These are also described elsewhere on this blog :)

  5. jack says:

    “Does it matter that in the next year or so I am going to probably get a raise at work? I have read enough to know getting a USDA loan means I can’t be over a certain income limit. I am real close. Can they check on me after I get my house??? I don’t want someone knocking on my door saying hey u make too much$. Sounds silly but plz tell me how this is handled.

    • Administrator says:

      In my 14+ years experience of funding these types of loans, I’ve never known the USDA to check on future income, post-closing.
      However as far as present income that you profess to the Lender, they can by all means verify that via tax return transcripts etc.
      Having said all this, if the VOE (“Verification of Employment” filled out by your Lender, confirms an imminent raise in income, the USDA underwriter may have to get higher level endorsement.

  6. Frazier says:

    WTF? Usda has had my package from my Loan officer for about 10 days. Is this normal?? My Loan officer us saying even though his Underwriter approved the loan its still got to get the last stamp of approval over at usda. Can someone please tell me what to expect????

    • Administrator says:

      Frazier
      this is normal. Once the file is ‘cleared’ by the Lender’s underwriter, the file (actually certain parts of the file) are sent to the USDA field office for the final Commitment. At that stage they look for stuff like Flood cert areas, Property Eligibility etc.

  7. Eric says:

    My buddy at work just bought with the USD loan. Kinda curious though. He already owns a house. I thought you couldn’t have another one???

    • Administrator says:

      ERIC
      not true. USDA has a rule that the buyer cannot own “adequate housing”.
      An example is a single guy with no kids living in a 4 bedroom home. Stop and think about it . .he doesnt need a bigger home.
      However a family of 4 living in 1 bedroom condo are clearly living in “INadequate” housing conditions.

  8. Lorenz says:

    My wife and I have been married for 2 yrs. In 2008, she filed BK by herself and it was finalized around Christmas of ’08. We applied with our local bank here and they told us we couldn’t go USDA. Whats your take?

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